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Investigators said Russell Todd McBride, 46, of Creve Coeur, and Robert P. Wrolstad, 59, of O'Fallon, Mo., were selling property at an inflated price and taking the profits for themselves while the investors were forced to foreclose.
"Cases such as this are an example of the impact that mortgage fraud has contributed to the credit crisis," Hanaway said. "Mortgage fraud causes damage to the economy as well as our neighborhoods. The investigation and prosecution of these cases can contribute to the restoration of confidence in the housing market."
According to the indictment, McBride owned Century Mortgage and Finance, Inc., which provided mortgage-related services at offices in Sikeston, Cape Girardeau, St. Louis County, and elsewhere. Wrolstad worked for McBride.
From July 2005 until November 2006, McBride and Wrolstad recruited investors to purchase at least 12 properties located in Sikeston. The owners sold the properties at fair market value, but the investors paid prices up to four times as much as the actual selling price.
For example, in one case a purchaser paid $66,000 for a property that the seller sold for $7,500.
McBride and Wrolstad enlisted appraisers to inflate the value on paper, and the pair submitted fraudulent loan applications to the lenders. The loss to the banks, which included the now defunct Washington Mutual, was at least $500,000, Hanaway said.
"Crimes of this nature are not victimless, and in the end consumers and entire communities share the cost of recovery," said Postal Inspector James Ball of the St. Louis field office. He added, "Postal inspectors are committed to ensuring the mail is not used for any type of fraud, large or small."
The indictment charges McBride and Wrolstad with one count of conspiracy to commit wire fraud and mail fraud, 12 counts of wire fraud, and 12 counts of mail fraud. In addition, McBride is charged with 6 counts of money laundering, and Wrolstad is charged with 3 counts of money laundering.
Hanaway said McBride is has no connection to the homebuilding company, McBride and Sons, in St. Louis.
If convicted, each face up to of 20 years of in prison and/or fines up to $250,000. Both defendants are expected to appear in federal court in Cape Girardeau on Thursday.
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